-- Fairfax sells U.S. agricultural media business
-- Penton Media buys business for US$79.9 million
-- Fairfax says sale to boost balance sheet
(Adds analyst comment from seventh paragraph, share reaction in
ninth)
By Gavin Lower
MELBOURNE--Australia's Fairfax Media Ltd. (FXJ.AU) said it had
sold its U.S. agriculture-focused media businesses as the company
strives to reduce debt on its balance sheet.
Fairfax sold Rural Press (USA) Ltd., which produces publications
and trade shows, to U.S.-based Penton Media Inc. (PTON.XX) for
US$79.9 million, it said Wednesday in a statement to the stock
exchange. The unit--which sits outside Fairfax's core operations in
Australia and New Zealand--includes the Farm Progress and Miller
Publishing Company businesses.
Fairfax, which owns a number of Australian newspapers including
the Age, Sydney Morning Herald and Australian Financial Review, has
been hit by weak advertising spending over the past year, alongside
a shift by advertisers toward cheaper online formats.
The U.S. asset sale is the latest by Fairfax as it moves to cut
debt while boosting investment in digital platforms.
"Penton is the natural owner of these very successful assets as
the group goes about further expanding its existing agricultural
information business in North America," Fairfax said in its
statement. Penton said on its website that the deal would make it
the largest agriculture-information business in the region.
Fairfax reduced its net debt by A$574 million (US$599.3 million)
in the last financial year to A$914 million as of June 30,
according to the company's annual report.
Commonwealth Bank of Australia media analyst Alice Bennett said
that while the sale of the U.S. assets would have modest impact on
Fairfax's debt pile, it was a step in the right direction.
She added that Fairfax appeared to have achieved a "good price"
for the assets--at roughly 7.5 times earnings before interest, tax,
depreciation and amortization for the businesses.
Fairfax shares jumped on the announcement. At 1134 GMT, they
were up 5.3% at 40 Australian cents, while the benchmark
S&P/ASX 200 was only 0.1% higher.
Last year, Fairfax floated its New Zealand internet-classifieds
business, Trade Me Group Ltd. (TME.NZ), and in June this year sold
down its stake to 51%. Fairfax has also sold off some radio
stations for an undisclosed amount.
Simon Marais, managing director of fund manager Allen Gray, a
major Fairfax shareholder, said it he thought it was "reasonable"
for the media firm to sell U.S. assets as long as the price was
right.
"They should not have a far flung empire," he said, adding that
the company should also consider selling its remaining stake in
Trade Me.
Write to Gavin Lower at gavin.lower@wsj.com
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